Have trouble with fullscreen gaming on Linux/Ubuntu? Try FSGamer for Linux. FSGamer is an opensource utility that runs games in its own X server, which can improve the speed, reduce annoying interruptions, and make switching between fullscreen games and your desktop easy and reliable. FSGamer version 0.1.1 has just been released and it seems to have squashed a number of annoying bugs and is working fine with Steam games now.

FSGamer Version 0.1.1 Released
A quick look at the features/benefits:

One can easily switch between the game and your normal desktop using Ctrl+Alt+F7 to get back to your desktop, and Ctrl+Alt+F8 to get to your game.

Game might run even faster, especially if you're on Ubuntu 12.04 with Unity desktop.

If the game crashes the X server for some reason, it won't affect your other applications.

Even games that allow switching back to other applications sometimes mess up when you restore their size, or take a while to minimize, or have various other issues with full screen such as the menu bar appearing over them. A separate X server will always be full screen with no fuss.

Improvements with the current release:

Solved multi-monitor support by adding ability to specify custom xorg.conf.

Works with Steam games now. You can even add Steam client as such.

Dependencies properly listed on DEB package.

How to Install FSGamer in Ubuntu?Disclaimer: FSGamer is still alpha-quality software and it might crash and cause problems every now and then. You've been warned.

Xwrapper.config file will open-up in Gedit. Change the last line from:

allowed_users=console to allowed_users=anybody

Finally, allow audio to work in the new X server.

sudo usermod -a -G audio $USER

Restart the system and you're ready to go!

NOTE: There seems to be no alternative RPM or AUR packages of FSGamer available at the moment. Which means, if you're using flavors of Linux other than the ones based out of Debian, you're out of luck. Make sure you follow this reddit thread for updates.